The coronavirus pandemic has led to challenging and stressful times, full of ambiguity and uncertainty. The virus fallout has hit all business sectors to their respective cores - and our real estate industry is no exception.  And even while we are all in the middle of finding ways of conducting business and helping our clients, we are wondering what will be the long-term impact to our industry? What will “normal” be after the COVID-19 lock-down ends?

The answer is: It depends on your definition of “normal.” It’s likely we will see a different way of life in real estate. It’s unlikely that way of life will be exactly as it was pre-Covid-19. The stay-at-home mandate is now in its second month, and the dial is beginning to inch in the opposite direction. Some states are beginning to lift restrictions while others lay out roadmaps. Our economy’s reopening is coming, but “normal” is still a ways down the road.

Here are a few thoughts about the coronavirus impact on our real estate profession and our PSAR members.

-- The virus-driven economic shutdown hit the normally active spring home-buying season hard by limiting supply and dampening demand. Inventory, which already was tight, is now even tighter with fewer numbers of new listings. Many sellers pressed pause on putting their home on the market. Their hesitation to list is understandable given the dynamic economic outlook and the uncertainty it generates. Coronavirus fears also made many more buyers cautious fence-sitters.

-- Expect better times in 2020 Q3. Much of the economic disruption will continue throughout the second quarter. But I’m expecting that many potential sellers who hesitated due to anxiety will list their properties in the third quarter. I’m also expecting a more balanced market with fewer unrealistic sellers, over-pricing their homes and refusing to negotiate. Concern among our members is increasing tempered with a“this too shall pass” perspective.

-- Low mortgage rates will fuel demand and spur a quicker recovery in Q3. Rates will hover in the 3 percent range. Refinancing activity will remain constant as homeowners scramble to lock in record-low rates.

-- Open house activity will change going forward. Instead of group open-house gatherings, I see an increase in private showings of homes. Fewer open houses with smaller numbers to maintain social distancing will be scheduled. I’m proud to see how our PSAR members are exhibiting ingenuity and adapting open house strategies to meet head-on the Covid-19 reality. PSAR members are using video virtual showings and video tours on mobile devices, with disinfectant, masks and hand sanitizers available at in the entryway of every house shown. Some open house tips: Require all visitors to disinfect their hands upon entering the home, provide alcohol-based hand sanitizers at the entryway, as well as soap and disposable towels in bathrooms; before and after the open house, ask your client to clean and disinfect their home, especially commonly touched areas like doorknobs and faucet handles.

-- The coronavirus has been the catalyst of a greater reliance on technology by our industry. Overnight out industry, out of necessity, evolved from a a high-touch, in person process. I see more REALTORS® using technology, that has in fact existed for years, to finalize remote home closings and other steps of the transaction process. Technology is helping us find workarounds to navigate legal requirements and consumer anxiety.

-- iBuying, or automated home flipping without the expertise of a REALTOR®, certainly has been impacted by Covid-19. Algorithms that were built to snap-up real estate bargains and put cash offers on the table are being used less. The use of algorithms to evaluate and flip homes has been slowed considerably.

-- New home developers have also been hit hard because they normally depend on sales and marketing events that are now not allowed. Several new developments originally scheduled to launch in the spring will now be deferred until later this year, if not next. Private appointments and an increasing use of digital viewing options are now key aspects of new home marketing.

PSAR members will always be called upon to adapt to and leverage changing market realities and use their knowledge, negotiating skills and technology to treat all parties fairly, get deals done and keep the local economies strong. We will always find new ways to add value to our clients. Something good comes out of every crisis because we make changes that make us better, smarter and stronger. Tough times teach you so much, lessons you’ll use throughout your careers. We will get through this tough time as we have done in the past. I believe our industry is in a position to thrive when this is over. Our clients will need us more than ever, so hang in there!

 

ShowingTime, available to CRMLS users at no additional cost, has made it easy to conduct showings virtually with its latest update.

Simply select “Virtual Showing” as the appointment type when verifying appointment details:

The showing agent may also add a note for the listing agent indicating which video conferencing solution they’d like to use for the showing.

Listing agents may also set their preferred appointment type to Virtual Showing.

 

For a full walkthrough of the Virtual Showing feature, visit the CRMLS Knowledgebase article.

 

PSAR launches Property Management Resource Page
PSAR will provide links and resources to property managers and landlords to help with information as we navigate the COVID-19 Crisis. It can be found here.

Judicial Council Suspends Evictions and Foreclosures
Among the actions the council approved, to go into effect immediately: Suspend the entry of defaults in eviction cases & Suspend judicial foreclosures. More information here.

CAR Releases two New Property Management Forms 4/6/2020
Form NTAP (Notice to Tenant of Ability to Pay Rent During Coronavirus Pandemic) is an informational notice that a landlord can send to a tenant for the purpose of starting a dialogue with the tenant regarding the payment of rent during the coronavirus pandemic.
Form RPD (Coronavirus Rent Payment Delay and Repayment) is an addendum to a residential lease or rental agreement that, when agreed to and signed by the landlord and tenant, documents the tenant’s claim that the tenant is unable to pay rent and the reason for the inability; proof of the inability to pay; the amount of the rent not being paid; and a plan to pay it in the future.

The Senate has just passed the Coronavirus aid, relief and economic security (CARES) Act, a stimulus package that will provide assistants to Realtors.   C.A.R. is closely monitoring the legislation.   Review CAR's update here.

 

CRIME PREVENTION FOR REALTORS® - Learn the strategies and
techniques that will help keep you safe.

Tuesday | September 17
South PSAR | 1:00pm - 3:00pm

Crime Prevention Specialist Angela Gaines has two decades of working in law Enforcement, first with the Lemon Grove Sheriff station , and for the last 13 years with the Chula Vista Police Department. Training will be fun and interactive.

Free Workshop Will Cover

Parking lot & vehicle safety tips
Safety strategies
Tricks to remain aware 
Learn to trust your gut Instinct
Personal security devices

Here’s news about another recent PSAR success: Once again, PSAR leadership has made a significant contribution that will result in additional housing availability and improved affordability for the San Diego real estate market.

Over the past two years, PSAR has been working closely with the City of San Diego on rules and regulations relating to what’s called “Companion Units.” While other governmental agencies call them “granny flats” or “accessory dwelling units” (ADUs), the City of San Diego calls them companion units.

Companion units, typically smaller than standard homes, are second units built on the same lot as an existing single-family home. Often, these secondary units are constructed in backyards or above garages of single-family residences. They can be used by family members or rented to seniors, students or others and can provide a source of income for homeowners. PSAR is in support of property owners expanding the use of their property as a way to address the region’s housing supply and affordability crisis.

PSAR’s participation with the City of San Diego recently culminated with the city's publication of the “Companion Unit Handbook,” a 38-page booklet that serves as a helpful guide to homeowners seeking to construct a companion unit on their property.  The handbook can be accessed here, CLICK HERE.

The handbook includes information on zoning, including setbacks and parking, companion unit design and construction, permitting requirements, funding options and additional resources. The handbook answers many popular questions relating to companion units, including: what is a companion unit and where is it allowed; what are the best sources for design of a companion unit; how does one make sure they’re well prepared; ideas and inspiration for the design of a companion unit; the construction and budgeting process; costs, timing and financial sources; impact on your property taxes; what is needed for permitting and occupancy.  

“It hasn’t been easy to make progress over the past two years, but it’s been very rewarding,” said Rafael Perez, PSAR REALTOR® member who has been leading the PSAR efforts with the City of San Diego.

“From the beginning, we brought a REALTORS® perspective to the table,” Perez said. “At first, some of the people at the city had not considered how companion units could change how homebuyers view their future purchase or how existing homeowners could increase their equity. So, we were able to help shape the regulations to benefit the city and homeowners and buyers.”

PSAR’s name appears on the cover of the city’s “Companion Unit Handbook” as a contributor to the publication, along with the San Diego Housing Federation and Local Initiatives Support Corporation (LISC). PSAR’s name also is appearing in a press release announcing the availability of the handbook that is being distributed by San Diego City Council member Scott Sherman.

“Personally speaking, I have been very grateful to receive input from PSAR,” said Sherman. “PSAR members have direct experience at helping their clients with companion units. So, it made sense to follow their advice in the writing of the handbook as we continue to seek workable, common sense solutions to fixing the housing crisis.”

Sherman agreed the handbook will serve as a helpful guide to help homeowners better navigate the process of construction a companion unit on their property.

“The design and construction of a companion unit is a step-by-step process. And, success often depends on preparation and a solid understanding of the process,” said Sherman. “For anyone who is considering building or adding a companion unit on a property, this handbook will be very helpful.”

Sherman added, “In a region where average rent is nearly $1,800 a month and the median price of a home is over $500,000, renters are actively seeking alternative options for affordable rent. In addition, homeowners are seeking alternative options in order to offset the cost of a home mortgage. Companion units can provide an immediate solution to the region’s housing supply crisis.”

Perez said, “Unfortunately, limited housing supply paired with limited construction of affordable for-sale housing units has put a severe strain on lower and middle class families. The ‘missing-middle’ forces families seeking the American Dream to make tough decisions to live on tight budgets or move out of the region. Making it easier to build companion units will help create options for more affordable homeownership as well as increase the supply of affordable housing units in our region.”

Granny flats, or companion units, represent perhaps the easiest and quickest way to provide additional affordable housing options to local residents. When it comes to housing that will help all of San Diego, PSAR is in favor of making the rules more streamlined and cutting through the thick red tape of processing the construction of new smaller rental units.

Current state regulations allow granny flats up to 1,200 square feet in size. They can be attached to, or built separate from, full-sized homes on the same parcel, and include kitchens, bathrooms, living areas and private entrances. They cannot be sold as individual homes, but they can be rented out by homeowners or used to provide additional living space for family members, friends, students, the elderly, the disabled, or in-home health care providers. Properties must meet all zoning requirements, such as setbacks that meet fire safety and building codes.

PSAR previously assisted the County of San Diego and the cities of Chula Vista and La Mesa with the creation and formation of ADU regulations.

PSAR members worked closely with the City of Chula Vista to reduce ADU fees and streamline their regulations. In the East County, following input from PSAR, La Mesa’s set of regulations for granny flats will, in some cases, enable the city to provide more options than do state requirements.

Meanwhile, at a County Board of Supervisors meeting held earlier this year, the Supervisors were considering a modification to their ADU code to require owner occupancy for an additional building on a lot, which PSAR recommended against. Fortunately, the Supervisors decided to remove the owner-occupancy requirement following PSAR testimony from Tracy Morgan Hollingworth, PSAR’s Government Affairs Director.

“I don’t know of any other local real estate organization that has given their support to these local jurisdictions like PSAR has,” said Robert Calloway, 2019 PSAR President. ”I’m very proud that these government bodies have turned to PSAR for assistance and agreed with our recommendations.”

California home sales fell to the lowest level in more than 10 years in January 2019, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R). Housing demand in the state remained subdued for the ninth consecutive month in January as economic and market uncertainties sent home sales to their lowest level since April 2008, said C.A.R.

Existing, single-family home sales statewide totaled 357,730 in January on a seasonally adjusted annualized rate, down 3.9 percent from the revised 372,260 in December and down 12.6 percent from January 2018 of 409,520. January marked the ninth consecutive month of decline and the sixth month in a row that sales were below 400,000, dipping to the lowest level since April 2008.

Sales in San Diego in January 2019 were down 17 percent from December and 10 percent lower from January 2018, according to C.A.R.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 357,730 units in January, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2019 if sales maintained the January pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“California continued to move toward a more balanced market as we see buyers having greater negotiating power and sellers making concessions to get their homes sold as inventory grows,” said C.A.R. President Jared Martin. “While interest rates have dropped down to the lowest point in 10 months, potential buyers are putting their homeownership plans on hold as they wait out further price adjustments.”

C.A.R. said the statewide median home price declined to $538,690 in January 2019, which was down 3.4 percent from $557,600 in December and up 2.1 percent from a revised $527,780 in January 2018.  

In San Diego County in January 2019, the median home price was $610,000, which was 1.4 percent lower than the $618,500 figure for December 2018 and 3.4 percent higher than the $590,000 figure for January 2018.

“While we expected the federal government shutdown during most of January to temporarily interrupt closings because of a delay in loan approvals and income verifications, the impact on January’s home sales was minimal,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “The decline in sales was more indicative of demand side issues and was broad and across all price categories and regions of the state. Moreover, growing inventory over the past few months has not translated into more sales.”

Other key points from C.A.R.’s January 2019 resale housing report included:

-- The median number of days it took to sell a California single-family home rose from 27 days in January 2018 to 37 days in January 2019, compared to 32 days in December 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market rose from 21 days in January 2018 to 28 days in January 2019, compared to 27 days in December 2018. 

-- Statewide active listings rose for the 10th consecutive month in January after nearly three straight years of declines, increasing 27 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 57 percent, followed by Southern California (29.7 percent), Central Valley (19.5 percent) and the Central Coast (14.5 percent).

-- The Unsold Inventory Index (UII), which is a ratio of inventory over sales, increased year-to-year from 3.6 months in January 2018 to 4.6 months in January 2019. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate. The jump in the UII from a year ago can be attributed to the double-digit sales decline and the sharp increase in active listings.

-- Forty of the 51 counties reported by C.A.R. posted a sales decline in January with an average year-over-year sales decline of nearly 19 percent. Twenty-eight counties declined by double-digits on an annual basis, and 10 counties experienced an increase in sales from a year ago.

-- The 30-year, fixed-mortgage interest rate averaged 4.46 percent in January, up from 4.03 percent in January 2018, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in January to an average of 3.91 percent from 3.47 from January 2018.

In other recent real estate and economic news, according to news reports:

-- A new LendingTree report found that 63 percent of homebuyers in San Diego County last year shopped around for a mortgage before settling on a home. The report also found that just 39 percent of the buyers had good or excellent credit, and the typical down payment was 12 percent of the purchase price. LendingTree ranked the 50 largest metropolitan areas in the U.S. based on an average of the city’s rank in three categories that contribute to the competitiveness of homebuyers in an area. Based on shopping for a mortgage, credit and the down payment percentage, Denver, Los Angeles, and Portland, Ore., have the most competitive buyers in the country. Buyers in these areas have higher than average credit scores and the ability to put down a larger down payment.

-- San Diego's Real Housing Price Index declined at the fifth fastest rate nationwide in November 2018 at 0.1 percent, according to First American Financial Corp. While the decline may seem marginal, the rate of that drop was exceeded only by San Jose (with a 0.7 percent decline), Boston (0.4 percent), Portland, Ore. (0.2 percent) and Pittsburgh (0.2 percent). Seattle tied San Diego with a 0.1 percent decline. 

-- According to S&P CoreLogic Case-Shiller, San Diego’s home prices rose 3.32 percent in 2018, the third slowest of the 20 cities covered by the index. National home prices were up 5.2 percent in a year, with Las Vegas leading the pack with a 12 percent gain.

-- According to a Zillow report, San Diego County experienced the third-highest year-over-year jump in housing inventory in the U.S. in January. Zillow said San Diego saw its year-over-year “for sale” inventory climb 31.9 percent in January to 9,810 units. Inventory has increased the most in five West Coast markets, giving home shoppers more options and ever-so-slowly tilting the market toward buyers, Zillow said. On an annual basis, inventory grew 42.9 percent in San Jose, 36.9 percent in Seattle, 29.1 percent in Los Angeles and 25 percent in San Francisco.

-- Also according to Zillow, a declining percentage of existing homes have been selling above the asking price nationally and San Diego County is no exception. Zillow found that just 17.4 percent of existing homes in San Diego County sold above their asking price in November 2018, and just 16.4 percent sold above their asking price in December 2018. An average of 29.9 percent of existing homes sold above their asking price in San Diego County in 2017, while that number dropped to 25.7 percent in 2018, Zillow said.

-- According to Redfin, San Diego County was the third least affordable housing market in the U.S. for millennials in 2018. While the median household income for a San Diego millennial was $78,433, the median priced home was only affordable to 24.3 percent of those households, Redfin found.

-- Also according to Redfin, home affordability is declining in San Diego despite more inventory. Redfin reported there were 10 percent more homes for sale in San Diego County in 2018 compared to 2017, but the number of affordable homes for sale fell 16 percent. The number of homes affordable to a San Diego household earning the median income in 2018 dropped to 22 percent. Redfin also said more users conducted online searches for San Diego homes than searches by local residents for homes outside the county in 2018.

-- Quinnipiac University's recent California-specific poll, conducted Jan. 30 to Feb. 4, recently found that 43 percent of the 912 Californians surveyed said they don’t make enough money to live in the state. Also, Quinnipiac found that well over half of younger California voters, 61 percent of the respondents 18 to 34 years old, say they can’t afford to live in the Golden State.

-- The U.S. unemployment rate has dropped to 3.7 percent, the lowest in nearly 50 years, according to the Bureau of Labor Statistics. Also, average earnings rose 8 cents, to $27.24 per hour in September 2018.

Lower seasonal home prices allowed more Californians to afford a home purchase in the fourth quarter of 2018, compared to the previous quarter, but higher interest rates pushed affordability lower compared to the previous year, according to the California Association of REALTORS®’ (C.A.R.) “Housing Affordability Index” (HAI).

C.A.R. said 28 percent of California households could afford to purchase the existing $564,270 median-priced home in the fourth quarter of 2018, which was up from 27 percent in third quarter of 2018 but down from 29 percent a year ago.

In San Diego County, only 24 percent of local households could afford to purchase the $625,950 median-priced home in the 2018 fourth quarter, up from 23 percent in the 2018 third quarter but down from 26 percent a year ago. 

"Affordability has been challenging the past few years in San Diego County. We’re facing a soft market right now in San Diego as prices remain flat while some buyers are remaining on the sidelines,” said Robert Calloway, 2019 PSAR President. “However, the market fundamentals, such as job growth, income growth and household formation, are still strong. Mortgage rates are down slightly and buyers are looking for deals because the time on market has gone up which has increased the housing supply, but they're no longer fighting each other tooth and nail to get in the front door.”

C.A.R. said its index has been below 30 percent for six of the past eight quarters. California’s housing affordability index hit a peak of 56 percent in the first quarter of 2012.

C.A.R.’s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. The index is considered the most fundamental measure of housing well-being for homebuyers in the state.

To afford to qualify to purchase the statewide median-priced, single-family home of $564,270 in the fourth quarter 2018, a household would need a minimum annual income of $122,340 to make the necessary monthly payments of $3,060. The monthly payment, including taxes and insurance on a 30-year, fixed-rate loan, assumes a 20 percent down payment and an effective composite mortgage interest rate of 4.95 percent. The effective composite interest rate was 4.77 percent in third-quarter 2018 and 4.17 percent in fourth-quarter 2017. 

In San Diego County, C.A. R. said a minimum annual income of $135,710 would be needed to make monthly payments of $3,390 on a 4.95 percent interest rate mortgage loan.

“One of the biggest things with the affordability of homes here in San Diego is typically household income levels, but we’re in a more favorable position when compared to other markets like the Bay Area and the Silicon Valley,” said Calloway. “Too many builders have focused on luxury homes, and there hasn't been enough construction of affordable starter homes. Fortunately, recent inventory increases and the slowdown in house price appreciation is good news for home buyers.”

C.A.R. also said housing affordability for condominiums and townhomes edged up in fourth-quarter 2018 compared to the previous quarter with 37 percent of California households earning the minimum income to qualify for the purchase of a $460,000 median-priced condominium/townhome, up from 36 percent in the third quarter. An annual income of $99,730 was required to make monthly payments of $2,490. Thirty-eight percent of households could afford to buy a condominium-townhome a year ago.

Compared with California, more than half of the nation’s households (54 percent) could afford to purchase a $257,600 median-priced home, which required a minimum annual income of $55,850 to make monthly payments of $1,400.

Other key points from C.A.R.’s fourth-quarter 2018 Housing Affordability report included:

-- Housing affordability improved from fourth-quarter 2017 in 10 tracked counties and declined in 30 counties. Affordability in eight counties remained flat.

-- All but one county in the Southern California region posted a decrease in affordability compared to a year ago. Affordability declined in Los Angeles, Orange, Riverside, San Bernardino and San Diego counties. Only Ventura County recorded an improvement.

-- During the fourth quarter of 2018, the most affordable counties in California were Lassen (66 percent), Kern (53 percent) and Kings and Siskiyou (both at 50 percent). The minimum annual income needed to qualify for a home in these counties was $52,030 or less.

-- Mono (12 percent), Santa Cruz (12 percent), San Mateo (15 percent), San Francisco (15 percent) and Santa Clara (18 percent) counties were the least affordable areas in the state. San Francisco and San Mateo counties had the highest minimum qualifying incomes in the state. An annual income of $326,290 was needed to purchase a home in San Francisco County, and an annual income of $329,300 was required in San Mateo County.

PSAR members filled a packed room this week at the East County Service Center in El Cajon to look into the future and hear “2019 Housing Market Outlook,” a presentation from Oscar Wei, senior economist, California Association of REALTORS® (C.A.R.).

Wei told PSAR members that housing market conditions in California will continue soft in 2019 as prices remain flat and sales pull back throughout the year because buyers are expected to remain on the sidelines.

“The overall market will continue on a declining trend,” Wei said. “Many California consumers believe home prices will be flat or falling next year, and any growth will be at a very modest pace.”

Wei also said the interest rates, which recently dropped due to economic uncertainties, will eventually climb higher. In addition, if a second government shutdown occurs, similar to the recent 35-day partial shutdown which exacerbated partisan divisions, then the real estate market and U.S. economy could be negatively impacted.

According to Wei, current market fundamentals, including positive job growth, income growth and household formation, are still solid even though sales are down double-digits despite recent declines in interest rates. Meanwhile, price growth remains near its lowest levels since early 2012. Still, a window of opportunity is currently open for buyers, he said.

“Many buyers should buy now before interest rates climb higher in the near future,” said Wei. “Inventory levels are improving, yet a tight supply led to one third of sales closing above asking price in 2018. Fortunately, active listings increased for the ninth month in a row through November.

“The Fed has raised interest rates nine times since December 2015. If interest rates increase too fast, then economic growth will come to a halt.”

Wei also offered highlights from C.A.R.’s annual homebuyers survey, including:

• Most recent buyers ended-up compromising in some way, either by paying a higher price for a smaller home than desired or living a farther distance from work or schools.

• The reasons why most buyers delay buying sooner include saving for a down payment, waiting for finances to improve and prices to stabilize or difficulty qualifying for a mortgage.

• 80 percent of recent buyers had been saving for buy for more than one year.

• The net cash gain to sellers of roughly $200,000 has been the highest since 2006.

He said California cities are still not allowing construction of a sufficient supply of new homes: the California Department of Housing and Community Development projects that 180,000 new units are needed annually to keep up with demand.

Wei also discussed local market activity. In Chula Vista, 1,589 homes sold in 2017, compared to 1,407 in 2018, a decline of 11.5 percent. In El Cajon, 1,162 homes sold in 2017, compared to 1,133 in 2018, a decline of 2.5 percent. In San Diego County, 7,412 homes sold in 2017, compared to 6,774 in 2018, a drop of 8.6 percent.

The median price per city was as follows: Chula Vista -- $570,000 in 2017, $569,500 in 2018, a difference of 0.1 percent; El Cajon -- $530,000 in 2017, $575,000 in 2018, an increase of 8.5 percent; San Diego -- $640,000 in 2017, $695,000 in 2018, an improvement of 3.1 percent.

Wei concluded his remarks by saying seven out of 10 Americans still believe that owning a home is an important part of the American dream, and 45 percent of home shoppers plan to purchase within the next five years.

Below are a few links to go to for more statistical housing market resources.  These resources are for Realtor members and will require a CAR login. 

Data & Statistics                              https://www.car.org/marketdata/data

Housing Affordability Index       https://www.car.org/marketdata/data/haitraditional

Housing Matters Podcast             https://www.car.org/marketdata/podcast

Market Minute                                  https://www.car.org/marketdata/marketminute

County Market Updates               https://www.car.org/marketing/chartsandgraphs/marketupdate

Interactive Market Stats               https://www.car.org/marketdata/interactive

Market Snapshot                            https://www.car.org/marketing/chartsandgraphs/marketsnapshot

Housing Market Webinar             https://www.car.org/knowledge/multimedialibrary/webinars/market

Also, click here to view Oscar Wei's Presentation.

California home sales declined for the eighth straight month in December 2018, according to the latest housing market report for home sales and prices from the California Association of REALTORS® (C.A.R). The year finished with fewer sales for 2018 for the first time in four years. For the year as a whole, sales statewide were down 5.2 percent from 2017.

December’s sales figure was down 2.4 percent from the revised 381,400 level in November and down 11.6 percent from sales in December 2017 of 420,960. December marked the fifth month in a row that sales were below 400,000 and the lowest level of sales sold since January 2015.

Sales in San Diego in December 2018 were 7.4 percent lower compared to November 2018, and down 14.7 percent from December 2017.

“The housing market continued to shift in December and drift downward as sales have fallen double digits for the past three out of four months,” said C.A.R. President Jared Martin. “This trend is expected to continue, as buyers remain cautious about the murky housing market outlook due primarily to the volatility in the financial markets and uncertainty in the economic and political arenas.

“Additionally, housing markets in and around the wildfire areas have been exhibiting unusual patterns that could remain unsettled for the next few months. The impact, however, is confined mostly within the region and should not have a noticeable effect in the housing market at the state level.”

C.A.R. said the statewide median home price in December 2018 was $557,600, which was up 0.5 percent from $554,760 in November 2018 and up 1.5 percent from a revised $549,550 in December 2017. The statewide median home price for the year as a whole was $570,010, up 6.0 percent from $537,860 in 2017.

In San Diego, the median home price in December 2018 was $618,500, which was 1.2 percent lower than the $626,000 figure for November 2018 and 2.2 percent higher than the $605,000 figure for December 2017.

Closed escrow sales of existing, single-family detached homes in California totaled a seasonally adjusted annualized rate of 372,260 units in December 2018, according to information collected by C.A.R. from more than 90 local REALTOR® associations and MLSs statewide. The statewide annualized sales figure represents what would be the total number of homes sold during 2018 if sales maintained the December pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

“California’s housing market in 2018 was hindered by endlessly rising home prices and interest rate hikes, which combined to erode housing affordability and hamper home sales,” said C.A.R. Senior Vice President and Chief Economist Leslie Appleton-Young. “As a result, while the statewide median home price surpassed its previous peak and set a new record in 2018, annual home sales fell for the first time in four years to a preliminary 402,750 closed escrows in California, down from 2017’s pace of 424,890.

“In the coming months, we expect a brief hiccup in sales as the government shutdown temporarily delays closings due to interruptions in IRS income verification or the processing of HUD, VA and USDA loans,” said Appleton-Young.

Other key points from C.A.R.’s December 2018 resale housing report included:

• The median number of days it took to sell a California single-family home rose from 25 days in December 2017 to 32 days in December 2018. Meanwhile, in San Diego County, the median number of days a home remained unsold on the market was 27 days in December 2018, compared to 22 days in November 2018 and 18 days in December 2017.
• Statewide active listings rose for the ninth consecutive month after nearly three straight years of declines, increasing 30.6 percent from the previous year. All major regions recorded an increase in active listings, with the Bay Area posting the highest increase at 65 percent, followed by Southern California (34 percent), Central Valley (24 percent) and the Central Coast (12 percent).
• The Unsold Inventory Index, which is a ratio of inventory over sales, increased year-to-year from 2.5 months in December 2017 to 3.5 months in December 2018. The index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.
• On a regionwide, non-seasonally adjusted basis, sales dropped double-digits on a year-over-year basis in the San Francisco Bay Area, the Central Coast, Central Valley and Southern California regions, with the Central Coast dropping the most at 24.9 percent.
• Thirty-nine of the 51 counties reported by C.A.R. posted a sales decline in December with an average year-over-year sales decline of 20 percent. Thirty-four counties recorded double-digit sales drops on an annual basis, and 10 counties experienced an increase in sales from a year ago.
• The 30-year, fixed-mortgage interest rate averaged 4.64 percent in December, up from 3.95 percent in December 2017, according to Freddie Mac. The five-year, adjustable mortgage interest rate also increased in December to an average of 4.02 percent from 3.39 from December 2017.

In other recent real estate and economic news, according to news reports:

• A new Zillow survey found that 27 percent of new homes in San Diego County experienced some price reduction in the fourth quarter, a 5 percent increase from the first quarter of 2018. Nationally, Zillow found that 25 percent of new homes experienced a price reduction in the fourth quarter, compared with 19.2 percent of homes in the first quarter of last year. Zillow said home shoppers nationwide may be able to find a better deal on a new home now than they could a year ago. Price cuts were more common in the fourth quarter than in the first quarter of last year, Zillow reported.
• CoreLogic recently reported that San Diego home prices were up 1.1 percent in November, after two months of decline. The real estate tracking company also said the median price in November was $565,000, which was $18,000 less than an all-time peak reached in August. 2018.
• The national economy is cooling but whether a recession is around the corner and how much a slowdown would affect the San Diego area is still an open question, according to local economists who met at the annual San Diego County Economic Roundtable at USD.
• San Diego County is one of the least affordable places to live in America, and renters know it. In 2017, 57 percent of the county’s renters were considered burdened by their housing costs, meaning they spent 30 percent or more of their income on rent and utilities. The figures come from data recently released by the Census Bureau’s American Community Survey. The problem is even worse for the 28 percent of renters in the county who spent more than half their income on rent and utilities in 2017. People with higher rent burdens are more likely to skip doctor appointments and avoid paying for medications, and they are less likely to save money.
• Demand for rental apartments has reached near record highs in San Diego, according to RealPage, a national property management and software company. San Diego was among 17 metro markets where apartment occupancy rates were at their highest in the third quarter of 2018, higher than they’ve been in the past 15 to 20 years. Occupancy rates in San Diego were the highest they’ve been in about 15 years, the company said.
• A new survey suggests a general dissatisfaction with the way things are going in California, mixed with politics to create a highly toxic brew. According to Competitive Edge’s recent poll of 806 likely voters, 15 percent of voters are seriously considering leaving and another 13 percent are giving it some thought.
• According to a recent survey from the Public Policy Institute of California, the 60 percent of respondents identified as likely voters are predicting that children growing up today in California will face a bleaker financial furniture than their parents. Sixty-seven percent of respondents said that the state was divided into haves and have-nots, and 45 percent considered themselves have-nots.
• San Diego County’s job market finished 2018 on a strong note. The local non-adjusted unemployment rate remained at a historic low of 3.2 percent in December, according to the California Employment Development Department. That’s unchanged from a revised 3.2 percent in November and below the 3.3 percent rate a year ago. The county lost 1,500 net positions in December. But year-over-year, payrolls added 28,400, up 1.9 percent.